The Public Provident Fund (PPF) is a government savings scheme that plays a major role in financial planning for millions of Indians. PPF Introduced in the year 1968 and its main motive is to encourage savings and provide financial security to individuals.
- Guaranteed Returns: Investment in PPF ensures a guaranteed return for investors who don’t want to take risks in their financial planning.The interest rate is notified by central govt which calculated yearly.
- Long-term Investment: PPF investment has been generally for 15 years, which providing a stable and disciplined savings behavior.
- Tax Benefits: Investment in ppf accounts is eligible for an income tax deduction under Section 80C of the Income Tax Act, up to a maximum of ₹1.5 lakh per annum.
- Flexible Contributions:One can deposit to their PPF account annually, with a minimum of ₹500 and a maximum of ₹1.5 lakh.
- Withdrawals: One can opt for partial withdrawal after 5 years from the end of the year in which the initial subscription was made.
Tax-Saving Investment:
PPF is a fixed-income investment product commonly used by individuals for tax-saving purposes. Both the investment amount and return are tax-free.
Interest Rate:
The interest rate on PPF is assured but not fixed. PPF provides a secured interest rate of 7.1 % as it is linked with government bond
Lock-in Period:
While the PPF has a 15-year tenure, your money doesn’t remain locked up for that entire duration. The lock-in period progressively reduces each year.
Extension Option:
After maturity, you can withdraw the entire money, but the account can also be extended indefinitely in blocks of five years.
Partial Withdrawals:
PPF allows investors to make partial withdrawals in case of emergencies. After completion of the sixth year, one can go for partial withdrawal. One can avail partial withdrawal of the investment amount.
Eligibility: After the sixth year of opening your PPF account, you are eligible to make partial withdrawals.
Withdrawal Limit: Customer having the flexibility to withdrawal from ppf upto 50% of the balances at the end of the fourth year.
Frequency: One can avail the benefit of partial withdrawal once in a year.
Remember to check with your bank or post office where your PPF account is held for specific guidelines and procedures related to partial withdrawals.
Purpose: These withdrawals are typically allowed for emergencies, such as medical expenses, education, or other urgent needs
Flexible Contribution:
You can deposit any amount between ₹500 and ₹1.5 lakh per year into your PPF account. One can contribute in two ways –in a lump sum or Installment mode.
Compound Interest:
PPF offers compounded interest, which means your money grows significantly over time. Interest is added Annually to the principal amount
Nomination facility is there :
One can add a family member as a nominee.
Benefit of loan against PPF
After the third year, you can avail of a loan against your PPF balance. The interest is lower in comparison to other loans.
Long-Term Wealth Accumulation:
PPF helps build a substantial corpus over time, making it suitable for goals like retirement planning, children’s education, and housing
